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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Chas who wrote (46470)	6/15/1999 5:31:00 PM
From: pz	Respond to of 95453

Tuesday June 15 4:43 PM ET Oil Giants Rally To Brazil Auction By Tom Ashby RIO DE JANEIRO (Reuters) - International oil companies rallied to Brazil's first-ever oil exploration auction Tuesday, putting up a surprisingly high $93 million for the right to explore in just four areas on the first morning of a two-day bidding round. The size of the initial bids confounded critics who had complained that the 27 areas on offer were too risky from a geological perspective and rewarded Brazil's efforts to sweeten its tax terms in last-minute horse-trading before the round. Italy's Agip, a subsidiary of ENI SpA, emerged as the star of the first morning, drawing gasps and cheers from 300 assembled executives with a $75 million bid for the offshore BM-S-4 block in the Santos basin, about 90 miles off the Atlantic coast near industrial center Sao Paulo. ''It's going really well,'' a jubilant Mining and Energy Minister Rodolfo Tourinho told Reuters. ''Much better than we expected. We already have Esso, Agip, Texaco, YPF, and at much higher bids than we expected,'' he added. The concealed-bid auction is the first chance foreign oil companies have had to buy concessions in Brazil's prolific offshore basins, which were firmly locked in the hands of state monopoly Petrobras for 45 years until 1997. Two onshore blocks received no offers during the morning, but the unexpectedly large bids on the other four blocks brought a broad smile to the face of David Zylbersztajn, president of the organizing National Petroleum Agency (ANP). The auction was preceded by weeks of last-minute negotiations with the 38 prospective bidders, when the ANP eliminated import taxes during the exploration phase and ironed out other concerns. The terms have proved so attractive that Petrobras, which only two years ago gave up the blocks to ANP, won a big stake in the first field to go under the hammer. Petrobras joined Agip and Argentina's YPF in a $3.4 million winning bid for the BM-C-4 block in the sought-after offshore Campos basin. U.S. major Texaco Inc. (NYSE:TX - news) stood as sole bidder on the BM-C-5 offshore Campos block with a $3.4 million bid, but was left far behind by U.S. rival Exxon with a $10.7 million offer for the BM-ES-1 deepwater block in the Espirito Santo basin. Agip's shock $75 million bid, by far the biggest of the morning, beat off two competitors -- Britain's BG with an $11 million bid and a consortium of U.S. independents Kerr McGee and Amerada Hess, with an offer of $5 million. Some analysts had predicted much lower bidding, as international oil exploration budgets have been slashed by last year's oil price crash. However, the enormous size of the blocks -- at an average of 4,500 square km (1,680 square miles) they are equivalent to 225 blocks in the Gulf of Mexico -- and the lure of Brazil's massive market proved overpowering.